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Independent Contractor Severance Agreement Template for England and Wales

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Key Requirements PROMPT example:

Independent Contractor Severance Agreement

"I need an Independent Contractor Severance Agreement for terminating a software development contractor who has been working through their limited company for the past 18 months, with a severance payment of £20,000 and standard confidentiality provisions."

Document background
The Independent Contractor Severance Agreement is utilized when ending a contractor relationship in England and Wales, whether through mutual agreement or unilateral termination. This document is essential for protecting both parties' interests by clearly documenting severance payments, tax treatments, ongoing obligations, and mutual releases of claims. It addresses key aspects such as confidentiality, intellectual property rights, and any post-termination restrictions, while ensuring compliance with UK contractor legislation, including IR35 considerations. The agreement is particularly important for maintaining professional relationships and preventing future disputes.
Suggested Sections

1. Parties: Identification of the contracting parties involved in the severance agreement

2. Background: Context of the contractor relationship and circumstances leading to severance

3. Definitions: Key terms and their meanings used throughout the agreement

4. Severance Payment: Details of the payment amount, timing, and method of payment

5. Tax Treatment: Tax implications and responsibilities for both parties regarding the severance payment

6. Release of Claims: Mutual release of legal claims between the parties

7. Confidentiality: Ongoing obligations regarding confidential information and trade secrets

8. Governing Law: Specification of jurisdiction and applicable law (England and Wales)

Optional Sections

1. Post-Termination Restrictions: Non-compete and non-solicitation provisions if required to protect business interests

2. Return of Property: Process and timeline for returning company assets and materials

3. Intellectual Property: Provisions regarding ownership and transfer of IP rights created during engagement

4. Reference Provision: Terms regarding future references and announcements about the termination

Suggested Schedules

1. Schedule 1: Payment Details: Detailed breakdown of severance payment components and payment schedule

2. Schedule 2: Ongoing Projects: List of projects requiring handover or completion before termination

3. Appendix A: Company Property: Detailed inventory of company property to be returned

4. Appendix B: Confidential Information: Specific details of confidential information covered by the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
































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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Employment Rights Act 1996: Primary legislation governing employment rights and contractor relationships, including requirements for valid settlement agreements under Section 203

IR35 Legislation: Tax legislation determining contractor status and tax implications for off-payroll working rules

Companies Act 2006: Relevant for contractors operating through limited companies, governing company operations and director duties

Income Tax Act 2007: Framework for taxation of settlement payments and income considerations

Taxation of Chargeable Gains Act 1992: Governs tax treatment of capital gains that might arise from settlement payments

Unfair Contract Terms Act 1977: Regulates unfair terms in contracts and limits the extent to which liability can be excluded

UK GDPR: Data protection regulations governing the handling of personal data in settlement agreements

Data Protection Act 2018: UK's implementation of data protection requirements, complementing UK GDPR

Copyright, Designs and Patents Act 1988: Governs intellectual property rights and their transfer or retention in severance situations

Trade Secrets Regulations 2018: Protects confidential business information and trade secrets post-termination

Civil Procedure Rules: Procedural rules governing any potential litigation arising from the agreement

Limitation Act 1980: Sets time limits for bringing legal claims related to the agreement

Equality Act 2010: Ensures no discriminatory elements in severance terms and protects against discrimination

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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